As I suggested last week, 3100 was a support level worth considering very seriously. The sensex closed below 3100 just for a day in this entire fall, on Monday, and then reversed. It also met my low target of 3050, though the second target of sub-3000 was not met. Despite war fears, the sharp reversal from the intra-day low of Monday was a signal that selling pressure was waning. Once the market bounced there was no looking back.

As usual, the inveterate bulls were in full force. As I said, a bullish scenario would take us to 3160 or even 3190. We crossed the first hurdle easily early on during the day on Thursday and eventually closed above 3190 for a 72-point blast.

On Friday the market consolidated its rise further, adding 7 points. It may seem meagre but after a 140-point rise from the bottom another 7-point rise is not be sneezed at.

Looks like we have had a strong fund-led rally over the past few days. If so, the rally is likely to continue over the next few weeks.

The market is heading for its first short-term serious resistance at 3230. From that level we may see a reaction, though I expect to head higher still.

At this stage I sense there is a lot of buying interest among funds and retail investors and even global markets are in a major seasonal rally.

Still, it is a trading market because, no matter what anybody tells you, large companies do not have earnings momentum to propel their stocks higher and higher. On the other hand, negative events may continue to crop up and spoil the rallies.

How far can we go in this run' I would think that the market would be looking for oxygen at 3275, another 75-point run from this level. At that stage, the media will talk of a resumption of the rally that started at 2800 level in October. Unfortunately, we may need strong bullish news for us to go beyond 3275. From the fundamental point of view, at around that level the top stocks would start looking fully valued (Reliance, Telco) to overvalued (Satyam, Wipro, ACC, Gujarat Ambuja).

I had said that in the rally the volatile stocks will shoot up the most. We already saw this happen with Infosys Technologies, Digital, Satyam and others. As usual, these stocks will start looking great buys to most people because they would have seemed “artificially depressed” by the Iraq crisis. While a quick further rally in software stocks is on the cards, don’t think you are buying value (great stocks at cheap prices).